Ahead of the Curve

The robotics and automation theme has been gaining a lot of attention recently for good reasons. There is an industrial revolution emerging across all industries as they realise that the new tools and applications being developed will be highly disruptive to existing business models. These new technologies cover everything from autonomous cars and delivery drones to surgical tools.

A $2trn investor coalition has published a report showing how 10 large restaurant companies have been responding to its calls for them to help reduce the use of medically important antibiotics by large meat and poultry producers.

The findings include that 70% of companies have now adopted either a comprehensive or partial policy to prohibit use in poultry, up from 50% in March 2016. In addition, 80% of companies report they are now actively engaging with suppliers to monitor antibiotic usage.

However, none of the companies surveyed had developed fully comprehensive, publicly available antibiotics policies to cover their entire livestock supply chain.

Richard Keery, investment manager at Strathclyde Pension Fund, said: “There is a growing public focus on rising levels of antibiotic resistance and the risks it poses to public health systems and ultimately to portfolio value. Antibiotic resistance is gaining traction as an important investment risk factor and the investor engagement is to be commended for ensuring this message is heard loud and clear in the restaurant sector.

“The pension funds and asset managers in the investor coalition will be watching closely to see what further reductions in antibiotic use can be made in this sector and beyond.”

G20 climate change commitment

Stephanie Pfeifer, CEO of the Institutional Investors Group on Climate Change (IIGCC), has commented in response to reports that Germany and other G20 countries “faced pressure to weaken the G20’s established commitment to climate action” from the US.

Pfeifer said the IIGCC has “made plain” that it expects the G20 to “provide unequivocal leadership on action to curb climate risk”.

“Failure by the G20 finance ministers meeting in Germany this weekend to back ambitious levels of climate action will only escalate systemic risks to the global economy and to the stability of financial markets, as [Financial Stability Board] chair Mark Carney has made clear,” she said.

The G20 communiqué did refer to a commitment to phase out “inefficient” fossil fuel subsidies.

ESG in the alternatives industry

If there was any doubt that interest in responsible investing is on the rise, another survey has demonstrated its increasing appeal, this time within the alternative investment industry.

The Massachusetts-headquartered Chartered Alternative Investment Analyst (CAIA) Association and Adveq, a global institutional private equity investor, found that “responsible investing, including the incorporation of environmental, social, and governance (ESG) factors and ethical principles, is growing in importance in the alternative investment management industry, driven by ethical principles, constituent demands, and new business opportunities”.

Adoption of industry standards (71%), pressure from institutional investors (67%), and positive investment return outcomes (64%) were identified by respondents as the largest drivers of greater adoption of responsible investing and ESG approaches, according to a statement about the survey.

“Responsible investing seems to be at a tipping point right now. It is garnering increased interest and momentum, which will likely accelerate in the years to come,” said William Kelly, chief executive officer at CAIA. “To support this demand, a more institutional infrastructure is needed including common standards, increased information, and education.”

BlackRock has launched a green bond index fund, citing “growing demand from investors for this fast-growing part of the fixed income market”. The fund aims to deliver investment performance reflecting the total return of the Bloomberg Barclays MSCI Global Green Bond Index.

Ashley Schulten, head of climate solutions for fixed income and co-manager of the fund, said: “We see a strong interest in green bonds from clients we service as they seek to participate in climate friendly and environmentally beneficial investments without making major changes to sector allocation or liquidity risk in their holdings. Clients interested vary from large institutional clients to family offices and retail investors.”